An electric utility is usually a corporation in the electrical power industry, which engages in the generation, supply, and distribution of electricity commercially for sale in a generally regulated marketplace. The electrical utility sector is an extremely important supplier of energy in many nations around the world. Electricity generated by hydroelectricity, geothermal or other renewable energy systems drives the demand for electric power and the resulting revenues that support electric power rates and prices. In addition, the enormous need for clean and safe fuel contributes to the importance of maintaining an adequate and diverse portfolio of electrical power plants. In this context, utilities play a substantial role in ensuring that the global energy mix is achieved.
an indispensable part of modern life. It provides light, heat, and communication in the home, office, and on the road. Electricity also provides medical services such as medical radiation, surgical treatment, dialysis, and blood transfusions, etc. Most utilities provide basic services such as heating and lighting, telecommunication (including cell phones, internet, television, etc), steam and water purification, air conditioning, etc.
The utility sector follows a very long-term investment cycle
and thus plays an important role in building a country’s economy and ensuring stability in the national budget. The long-term advantages of investing in utilities are substantial. First, such investments yield high returns with little or no risk. Second, the sector offers a diversified income platform. Third, through acquisitions and joint ventures, utilities can also acquire or purchase other companies providing similar or related services.
Most jurisdictions in the US
have deregulated markets for the electricity provider. These deregulated markets provide an opportunity for investors to buy shares in the utility companies at a reasonable price. Historically, the domestic wholesale electricity markets have been controlled by a few dominant players who control a sizeable stake in the market. These players typically dominate the industry through long-term contracts and substantial investments in infrastructure and operations. The deregulated environment allows smaller companies to enter the market and compete with the big players. Consequently, competition has driven prices down and incentives for consumers to switch over to more affordable and reliable services.
In some areas, there has been rapid growth
in internet broadband and cable companies that have provided consumers with access to improved and cheaper services. The growth in these internet providers has created a new consumer demand for better service delivery coupled with competitive pricing and customer-friendly policies. In some cases, these new opportunities have attracted new investments from companies looking to capitalize on the growing popularity of these internet service providers. The result is that a variety of new and innovative utility companies have entered the electric utility business. With increased competition, prices have fallen and the share price of utilities has fallen. To continue to provide reliable service, electric companies are keen on developing solid customer relationships and developing cost-effective electric utility plans.
Rising demand and low supply
have resulted in rising electricity and natural gas prices and a corresponding increase in the number of utility start-ups. Start-ups in this sector can offer their customers a wide range of benefits including flexible tariffs that are designed to meet the specific needs of customers. More start-ups may result in increased competition leading to even further price and service reductions. With a focus on the future and an ability to develop solutions to the operational needs of utilities, the utility sector is an exciting area for start-ups.